Nigerian micro-lending startup, Fairmoney, has raised $42 million Series B led by US hedge fund and investment firm Tiger Global. Existing investors that participated in the round include – partners of DST, Flourish Ventures, Newfund, and Speedinvest.
With an active presence in Nigeria and India, the startup plans to diversify its current offerings and expand to become the preferred financial destination for its users.
Founded in 2017 by Laurin Hainy (CEO), Matthieu Gendreau, Fairmoney (CTO), Nicolas Berthozat (Product co-founder), Fairmoney provides mobile-based collateral-free lending services to Nigerians.
In 2020, the company quietly expanded to India and was able to gain a decent foothold to disburse half a million loans in just six months.
In the same year, the startup claimed it had up to 1.3 million users who had made over 6.5 million loan applications. It also reported that it disbursed $93 million worth of loans.
Just six months later, Hainy says Fairmoney Nigerian users have increased to 3.5 million, and it has disbursed up to $80 million worth of loans in Nigeria. Just a couple million shy of its entire 2020 disbursement. It reportedly also has 1.3 million unique account holders.
The company projects a $300 million loan disbursement in 2021; A $270 million disbursement in Nigeria and $30 million in India.
Hainy reveals Fairmoney has secured a Microfinance bank (MfB) licence from the Central Bank of Nigeria (CBN) and with the new funds, it plans to expand its services to further underline its position as a digital challenger bank for emerging markets.
“We’re going to delve into SME-lending and we’ll start offering current accounts to our customers,” Hainy says.
Like personal micro-loans, SME lending has been historically poor in Nigeria. Most commercial banks have shown a preference for lending to government institutions and other large corporate institutions but shied away from riskier personal or MSME loans.
A dearth of credit data for consumers and small business owners have contributed to this trend, but Hainy believes the Nigerian credit landscape is changing with the rise of API-led fintech startups like Okra and Mono.
Hainy also points out that the company has been able to gather data on some of its users who happen to be small business owners.
To reach Nigeria’s 57.8 million unbanked adults, Hainy says the company plans to partner with a network of Super Agents around the country. The goal, according to Hainy, is to become one of the top two commercial banks in Nigeria in the coming years.
“Our vision is to build the financial home for our users and this new round of funding will allow us to go deeper into our core markets. we are incredibly excited by the opportunities ahead for FairMoney as we enable more underbanked consumers in emerging markets to access digital financial services,” Hainy says.
“With this funding, we’ll be hiring top talents across the globe, including over a hundred engineers from different countries. We’re a very mission-driven company so we’ll be hiring people with a growth mindset,” he adds.
The ride might not be a straightforward one though, and Hainy is well aware of the challenges.
With digital banks like Kuda, Sparkle, V by VFD, and several others springing up, a prevailing sentiment pointed out by Kuda CEO, Babs Ogundeyi, is that these banks are used to augment the services of a regular commercial bank.
“A big challenge will be having to change the perspective of the customer to see the company as a bank and not just a lender. We’ll also have to open a compliance department to make sure we’re up to date with various regulatory requirements,” Hainy admits.
Recall that in 2019, the company raised $11 million Series A. Factoring it’s $1.2 million seed round from 2018, the latest funding brings Fairmoney’s total disclosed funding to $54.2 million.
For Tiger Global, Fairmoney’s funding round makes it another major investment for the firm after it participated in Flutterwave’s Series C, in March 2021.
“We are excited to partner with FairMoney as they build a better financial hub for customers in Nigeria and India. We were impressed by the team and the strong growth to date, and look forward to supporting FairMoney as they continue to scale,” says Scott Shleifer, a Partner at Tiger Global.
Hauny affirms that Tiger Global’s track record on the continent makes them an ideal partner to bring in at this stage of the company.
Per Hainy, Fairmoney is not looking to expand to any new market, it simply wants to focus on making it’s current services better than they currently are, and eventually win more market share from “cash”. A simple product Hainy believes is every Nigerian fintech’s biggest competitor